The fastest way to impoverishment or to destroying a retirement income strategy or to impact multiple generations physically, emotionally, and financially is not an extended healthcare event. It is not adequately planning for such an event.
According to retirementliving.com, the cost of memory care in 2019 is:
Average memory care unit $5,745 per month
Highest cost average $13,216 per month Hawaii
Lowest cost average $4,132 per month Arkansas
For many, recommendations that last 2, 4, or 6 years are made to defend against a long term care event – that is playing the averages and not fully addressing the situation. What is the plan when that care is needed for 8, 10, 14 years or more?
I am not diminishing the importance for those shorter duration strategies (every company in the LTC arena offers them including OneAmerica), I am saying that long duration events deliver the biggest blow to the family on many levels.
Here is our scenario – Mrs. Smith has been diagnosed with Alzheimer’s and is receiving care. The cost of care increases over time as her needs increase. Let’s look at how Asset Care with a lifetime benefit and $6,000 of monthly benefit and another carrier’s solution with 6 years of benefit and $6,000 of monthly benefit (in both cases annual benefit is $72,000).
| Annual Cost | Asset Care | Policy M | ||
| 1 | 36,000 | 36,000 | 36,000 | begin home care ($3,000/month) |
| 2 | 54,000 | 54,000 | 54,000 | home care increases ($4,500/month) |
| 3 | 72,000 | 72,000 | 72,000 | moves to memory care unit |
| 4 | 72,000 | 72,000 | 72,000 | remains in memory care unit |
| 5 | 72,000 | 72,000 | 72,000 | remains in memory care unit |
| 6 | 72,000 | 72,000 | 72,000 | remains in memory care unit |
| 7 | 72,000 | 72,000 | 54,000 | remains in memory care unit |
| 8 | 72,000 | 72,000 | 0 | remains in memory care unit |
| 9 | 72,000 | 72,000 | 0 | remains in memory care unit |
| 10 | 72,000 | 72,000 | 0 | remains in memory care unit |
| 12 | 72,000 | 72,000 | 0 | remains in memory care unit |
| 378,000 | 378,000 | 378,000 | 6 years aggregate | |
| 576,000 | 576,000 | 432,000 | 8 years aggregate | |
| 864,000 | 864,000 | 432,000 | 12 years aggregate |
Should Mrs. Smith have a moderate to short duration need – either policy will provide the same level of benefit assuming that her costs are “average” or below. But, move that to a longer duration, and you will see that only one solution provides the depth of benefit to meet Mrs. Smith’s needs without disruption.
That is what the Care Solutions is about – the long term!
Fridays with Fisher 